Indian Rupee Strengthens After RBI Signals More Support to Defend Currency

The Indian rupee recovered on Monday after falling close to record lows last week, supported by comments from Reserve Bank of India (RBI) Governor Sanjay Malhotra indicating that authorities remain prepared to intervene further if needed.

The USD/INR exchange rate, which measures how many rupees are needed to buy one U.S. dollar, declined by 0.5% to around 95.70 rupees, improving from nearly 97 rupees reached during last week’s selloff.

RBI Intervention Helps Stabilize the Rupee

Market participants observed signs that the Reserve Bank of India stepped into currency markets last week to help support the rupee and reduce pressure from continued depreciation.

The intervention appeared to pull the USD/INR pair away from historic highs and restore some confidence in the Indian currency.

Speaking to Mint, RBI Governor Sanjay Malhotra stated that the rupee appeared undervalued and emphasized that the central bank would do “whatever is required” to prevent further weakness.

His comments reinforced expectations that policymakers remain willing to actively defend the currency if volatility persists.

Falling Oil Prices Provide Additional Support

The Indian rupee also benefited from lower global oil prices on Monday.

Crude prices dropped after signs emerged over the weekend suggesting potential progress toward a diplomatic agreement between the United States and Iran.

Because India relies heavily on imported oil, higher energy prices often place downward pressure on the rupee by increasing import costs and widening trade imbalances.

As oil prices eased, some of that pressure on the Indian currency began to fade.

Iran Conflict Weighed Heavily on the Rupee

Since tensions escalated in the Middle East earlier this year, the rupee has been among the weakest-performing major currencies globally.

The currency has reportedly lost roughly 6% of its value since late February, reflecting concerns over rising energy costs, inflation pressures and external vulnerabilities tied to oil imports.

The prolonged weakness raised speculation that the RBI might eventually consider increasing interest rates to support the currency.

RBI Rules Out Interest Rate Hikes

Despite concerns surrounding the rupee’s decline, Governor Malhotra dismissed expectations that the central bank would raise interest rates as a response.

His comments suggest the RBI may prefer currency market intervention and other measures rather than tightening monetary policy to stabilize the rupee.

Investors will continue monitoring both oil prices and RBI actions as key factors influencing the future direction of India’s currency.